Andrew Bolt has a post where he shows some data John Comnenus has assembled. The bottom line is that Labor has spent too much money and the decline in revenue that Swan keeps complaining about isn’t quite true. What the data analysis does in compare forecast budget data from the last Costello budget to the current MYEFO data. What you see when you do that exercise is that revenue has increased and spending has increased. The cause of our current fiscal problems – too much spending. While I like that argument, the data comparison is misleading.
One of the first things the Rudd government did was to change how the budget data was presented. In particular the Treasury would (correctly) treat the GST revenue as a Commonwealth tax and would include it in the budget papers. While that is sensible, it also means that we can’t compare the budgetary performance of the Rudd-Gillard government against the last Costello budget. (Alas – I know this because I’ve tried before). Just to convince everyone I have cut and paste the revenue and expenditure data from the last Costello budget and the recent MYEFO side by side (the table is a bit untidy). The big numbers on the LHS of each box are revenue and the big numbers on the RHS of each box are expenditure. As you can see they are very different in each year.
So it does look like revenue and spending have both rocketed up – supporting the John Comnenus argument. So while he is wrong on the specifics the idea is correct. What can be done is to compare the first Swan budget (before the GFC terrorised the government into spending too much) to subsequent budgets. So what I have done in the tables below is capture revenue and spending data – the first column shows data from the first Swan budget and by moving across to the right we can see what has happened.
So what has happened? Revenue has fallen relative to expectations. Spending has increased. So I agree with the overall position that the government needs to cut spending – we’ve been saying that at the Cat for years – but it isn’t correct to argue the government has had a lot more money to spend relative to expectations.
(Thanks to Noodle for the heads up).
Update: I remember now that we’ve discussed this problem before.
Of course it would be even better to compare the last Howard government MYEFO (October 2007) to the latest MYEFO, but the numbers are not entirely comparable. One of the better Rudd government decisions was to include the GST as a federal government tax and outlay in the Budget papers. So the comparison is not ideal, but a lot of the first Rudd budget would consist of what they’d inherited, so I don’t imagine too much difference between the two (although Rudd did suggest that the reckless spending must stop).
Update II: Samuel J and I argue that spending has been the major cause of debt and deficits.
Sinc, I presume the middle figure in the MYEFO table is the percentage of GDP (whether revenue or expenditure is unclear). The current year is the lowest in the table, which I must say I find surprising.
Mother Hubbard's Dog
2 Dec 11 at 6:24 pm
yes – that’s right.
Sinclair Davidson
2 Dec 11 at 6:29 pm
Afternoon Sinclair,
Interesting. Noting that the GST is really a state tax collected by the Commonwealth [i.e. is not a source of revenue for the Commonwealth], wouldn’t it be more appropriate to utilise figures that exclude GST?
A good graph provided by Treasury that I saw recently [yet only covers pre-Labor]
http://lockerz.com/s/160633867
Scott
2 Dec 11 at 7:01 pm
No.
.
2 Dec 11 at 7:02 pm
The GST is a Cwth tax that the Cwth uses to fund its untied grants to the States. It isn’t a State tax as KRudd demonstrated when he threatened to withhold a third of the revenue to fund his great health cock up.
Johno
2 Dec 11 at 7:18 pm
Stephen Koukoulas (until recently a Labor apparatchik economist) quotes figures that seem to assert almost the opposite.
I suspect the truth may be somewhere in between these extremes. I also suspect Koukoulas might generate his figures in part by shifting GST from the federal to state column. Your advice is sought.
Ken Parish
2 Dec 11 at 7:21 pm
He still is. The tax burden is the spending burden. You cannot make the numbers disappear.
It’s also easy to lie about these things, in that Rudd raised all tax rates in real terms (fiscal drag) and instituted new taxes to pay for this profligacy, it’s also easy to “drop” taxes when you tax future generations instead.
What an unseemly, grubby fellow.
What a bloviating fool, they blew out to 38% under this shitheap of a Government.
.
2 Dec 11 at 7:32 pm
Ken – I’m looking at the post 2007 election period only. Stephen has done a comparison. I haven’t looked at his analysis carefully, but I suspect his data are correct. Whenever you compare ALP or coalition government economic outcomes they tend to be very similar. What with the difficulty in raising revenue in the last couple of years the ALP would look good in that comparison.
Sinclair Davidson
2 Dec 11 at 7:34 pm
No. Sorry Scott, the GST is a Commonwealth tax – it has to be. The States cannot raise an excise tax.
Sinclair Davidson
2 Dec 11 at 7:35 pm
“No. Sorry Scott, the GST is a Commonwealth tax – it has to be. The States cannot raise an excise tax.”
I think it’s fair to argue for some comparative purposes it’s a State tax. After all, all GST revenue is reserved for the States, and it replaces the tobacco, petrol, alcohol “franchise fees” the States relied on to get around Constitution s 90 until Ha’s Case. Thus, if you’re comparing pre and post 1998 it may make sense to treat GST as a State tax.
Ken Parish
2 Dec 11 at 7:40 pm
The real test is to look at the far right column of the first table. 20011-12 estimate: $370b. 2012-13 estimate: $370b.
Does anybody inside Treasury or out really believe that this government is capable of no increase in nominal dollar spending – next year or any other any year?
Mookster
2 Dec 11 at 7:42 pm
in an election year no less. ha ha ha.
entropy
2 Dec 11 at 8:17 pm
?
I’m comparing budget estimates from 2008 to subsequent budget estimates. Nowhere near 1998. The point about the GST is that there is a substantial change in the data after 2008 that makes a simple comparison pre and post 2008 difficult and misleading for the purpose John put it too.
Sinclair Davidson
2 Dec 11 at 8:24 pm
This reminds me. Australia should have TABOR.
http://en.wikipedia.org/wiki/Taxpayer_Bill_of_Rights#The_Colorado_example
TerjeP
2 Dec 11 at 9:05 pm
Long bow there.
It’s a Commonwealth tax raised by the Feds and then ‘reallocated’ to the states on a basis that bears no resemblance to the GST incomings from each state.
Hence it effectively punishes the states that raise the most GST (e.g. NSW) and is subsequently used to subsidise the states that raise the least – e.g. that hippy infested basket case tasmania.
Not. Good. Enough.
It should be reallocated on an equalised basis (i.e. each jurisdiction gets back what it raises) and stuff the consequences. Then it would truly be a ‘state’ tax.
If you produce and spend nothing, don’t expect the rest of us to subsidise your basket weaving and tree hugging.
Get off your fat stupid hippy arses and work, you vile commie scumbags.
Oh and for the last friggin time, get your filthy hippy paws out of my wallet.
Rabz
2 Dec 11 at 9:25 pm
I am not an accountant or an economist. A question, if I am interpreting your table correctly, is it normal for governments to get their forward estimates so wrong? I can understand revenue projections being off over three years but spending, wow. How consistently wrong can you be before it is more rational to disregard the projections completely.
I find this argument similar to the one I have with my company secretary every month, as he babbles about types of income, recoverables and sales etc, and conflates projections, and debtors, with actual cash sales, with historical actuals (accrual accounting anyone? Similar to tacking tree-ring data onto the physical temperature record and pretending they are somehow equivalent).
It is all just paperwork to keep the ATO and state revenue clerks employed. I don’t consider money paid to the commonwealth any different than money paid to state governments. It is all dead money.The only thing that matters to me is how much we collected and how much we spent. On that score I think we all agree that the governments problem is very simple.
Harry Won A Bagel
2 Dec 11 at 9:34 pm
HWAB
The Costello was notorious for underestimating tax receipts, hence the ability of the Howie gubment to provide tax cuts AND run a surplus.
Mind you, they also didn’t spend like drunken sailors, as this grubby collective of criminal incompetents has been busy doing* …
*and will keep doing, unless we forcibly f*cking remove them. Stuff waiting another 18 months, I’ve had enough – heads on stakes, anyone?
Rabz
2 Dec 11 at 9:42 pm
Awesome. This should be on big billboards in select locations.
Chris M
2 Dec 11 at 10:29 pm
“One of the first things the Rudd government did was to change how the budget data was presented. In particular the Treasury would (correctly) treat the GST revenue as a Commonwealth tax and would include it in the budget papers. While that is sensible, it also means that we can’t compare the budgetary performance of the Rudd-Gillard government against the last Costello budget. (Alas – I know this because I’ve tried before)”
Standard trick of shonky accountants – ‘sorry, you can’t compare last year, the basis has been changed.’
Well, how about finding the GST figures and making the appropriate adjustments? Surely, it’s straightforward?
Or to quote The Gondoliers: “Mount Vesuvius, here we are in arithmetic!”
Signed: A curmudgeonly CPA.
John A
3 Dec 11 at 4:49 pm